The Facts
According to the S&P CoreLogic Case-Shiller index, US house prices logged a 15.8% increase in July over the same month in 2021, lower than the 18.1% annual increase recorded in June and the fastest slowdown of gains on record.
The cooldown in the market comes as mortgage rates have surged — with the 30-year-fixed mortgage breaching 6% in September for the first time since the 2008 crash — and as the Federal Reserve (Fed) continues to rate hikes in response to record-high inflation.
The Spin
Narrative A
While it might not be equivalent to the 2008 crash, the US housing market is headed toward a significant decline in both home buying and home construction. Anyone who recently bought a house to beat the Fed interest rate hikes will now be sitting at a loss, and home prices will only drop further, essentially depleting the market.
Narrative B
Since homebuying demand is low right now, it has given industries like homebuilding material suppliers and homebuilders freedom from the overwhelming pandemic-era demand and turbulence that drove up prices. The drop in demand will drop home prices, correcting the market and eventually bringing the US housing market back to normal.
